Microsoft cloud helps spur $13.2B in profits

Cloud computing now almost a third of total revenue, company says.

Microsoft reported quarterly profit of $13.2 billion, powered in large part by a steadily growing cloud computing business that the company says now accounts for almost a third of its total revenue.

CEO Satya Nadella even said in a call with investors Thursday that “our commercial cloud business is the largest in the world,” although that’s only true if you use Microsoft’s unique definition. The company counts its widely used office software and similar online services as part of its overall cloud business. That’s in addition to cloud infrastructure such as data centers and servers, where Amazon is the market leader.

Microsoft said it had net income of $1.71 per share in the fiscal fourth quarter, which ended June 30. Earnings, adjusted for nonrecurring gains, were $1.37 per share.

The results exceeded Wall Street expectations. The average estimate of 14 analysts surveyed by Zacks Investment Research was for earnings of $1.21 per share.

The software maker also surpassed forecasts by posting revenue of $33.7 billion in the period, a 12% increase over the same time last year. Eleven analysts surveyed by Zacks expected $32.7 billion.

The company’s fastest-growing segment was what it calls the “intelligent cloud,” which includes server products and its Azure cloud computing platform. The segment’s revenue was $11.4 billion, up 19% from a year ago.

Synergy Research Group analyst John Dinsdale says Microsoft is still a long away behind Amazon but well ahead of the rest of the pack as a provider of cloud infrastructure services.